How to Sell Your Restaurant

To sell your restaurant, you recast your last twelve months of financials into seller's discretionary earnings (SDE), multiply that number by 1.5x to 3x depending on how much of the business runs without you, add the depreciated value of your equipment and any transferable lease value, and then market it privately to the three buyer pools that actually close: your own staff, a local operator who already runs something nearby, and a first-time buyer with SBA financing. Most independent restaurants trade for 1.5x to 3x SDE, or roughly 25% to 40% of annual revenue. The gap between the low end and the high end is almost entirely about how clean your books are and how little the business depends on you personally.

Owners who start preparing twelve months before listing typically clear far more than owners who decide in September that they want out by Christmas. Late summer is when many operators make that call, which is exactly the wrong time to start — buyers underwrite trailing twelve-month numbers, so the work you do now determines the price you get next spring.

What buyers are actually buying

They are not buying your recipes or your reputation. They are buying a cash flow stream and a location, and they discount hard for anything that makes that stream look fragile. Five things drive the multiple:

The lease is the one owners underestimate most. A restaurant with two years left on a non-assignable lease is very close to unsellable at any price, because the buyer is financing equipment and goodwill they could lose in 24 months. Renegotiating a five-year extension before you list can add more to your sale price than a whole year of margin improvement.

Step 1: Recast the numbers into SDE

SDE is what a working owner-operator would actually take home. Start with net profit from your P&L and add back the things a new owner won't inherit:

• Your own salary and payroll taxes (one working owner only)
• Depreciation and amortization
• Interest on debt the buyer isn't assuming
• One-time expenses: the hood replacement, the legal fight, the failed patio build
• Personal expenses running through the business: your vehicle, your phone, family meals, the trip you called "research"

Every add-back has to be documentable. Buyers and SBA lenders will ask for the invoice. An add-back you can't prove doesn't just get removed from the calculation — it makes them suspicious of every other number you gave them. If you're unclear on where these lines live, How to Read a Restaurant P&L Statement walks through the structure.

The single highest-return thing you can do before selling is make the business run without you. A restaurant that needs the owner on the line every night is a job being sold as an asset, and buyers price it that way.

Step 2: Clean up the year before you list

Twelve months out, start operating like you're already being audited. That means: every sale rings through the POS, personal spending comes off the business card, inventory is counted on a schedule, and your monthly close actually closes. Cash sales that never hit the register feel like savings while you own the place and cost you three dollars of sale price for every dollar you skimmed.

Buyers verify revenue by cross-checking your POS reports against your bank deposits and tax returns. If those three numbers don't agree, the deal either dies or gets repriced. Running on Cobblestone POS makes that verification easy — every sale, every daypart, every item's margin sits in exportable reports a buyer's accountant can reconcile in an afternoon, which is exactly the kind of due diligence that closes deals instead of stalling them. It's free and all-in-one, with commission-free online ordering, scheduling, loyalty, and its AI assistant Daisy built in, so the buyer also inherits zero POS overhead instead of the $470+ a month a comparable Toast setup carries. A clean data trail and no software bill is a small but real argument for a higher price.

Step 3: Price it, then package it

Run your SDE through the multiple range, sanity-check it against a percentage-of-revenue figure, and add equipment at depreciated value rather than replacement cost. The worksheet does this three ways and shows you the spread. Then build the package a serious buyer expects:

1. Three years of P&Ls and tax returns
2. Trailing twelve months of POS sales reports, by month and daypart
3. A copy of the lease with any options and the landlord's assignment terms
4. Equipment list with ages, and which items are leased versus owned
5. Staff roster with roles, tenure, and pay — no names required at first
6. A one-page summary: concept, seats, hours, revenue, SDE, asking price

Keep the sale confidential until you have a signed offer. Staff who find out early start looking for work, and losing your kitchen manager mid-diligence can cost you the deal.

Where the buyers come from

Listing sites generate volume and almost no serious buyers. In practice, deals close with people already inside your world: a manager or chef who wants ownership and can be seller-financed, a nearby operator looking for a second location, or an SBA-backed first-timer working with a broker. Quietly telling two trusted suppliers and your commercial broker that you'd "listen to an offer" reaches more real buyers than any public listing.

Step 4: Know what you keep

Asking price is not proceeds. Subtract the broker fee if you use one (typically 8–12%), your remaining debt, legal and accounting costs, and any seller note you carry. Then subtract taxes — the allocation between equipment, goodwill, and the covenant not to compete changes your tax bill meaningfully, and it's negotiated in the purchase agreement, so get a CPA involved before you sign anything.

Most independent sales close in four to eight months, with 60 to 90 days of diligence at the end. Expect to carry 10–20% as a seller note and to stay on for two to four weeks of transition. Budget for that timeline before you mentally spend the money.

If you're curious how the other side of the table runs the same math, How to Buy an Existing Restaurant and Understanding Restaurant Valuation cover the buyer's view — and reading them is the fastest way to spot the weaknesses in your own listing before someone else does.